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Tuesday, May 3, 2011

Whole Foods Market Inc. (NASDAQ: WFMI) is scheduled to release its fiscal second-quarter earnings after the closing bell on Wednesday, May 4, 2011. Analysts, on average, expect the company to report earnings of 46 cents per share on revenue of $2.37 billion. In the year ago period, the company reported earnings of 39 cents per share on revenue of $2.11 billion.

Whole Foods Market Inc. engages in the ownership and operation of natural and organic foods supermarkets primarily in the United States. The company has more than 300 stores in the United States, Canada and the United Kingdom.

In the preceding first quarter, the Austin, Texas-based company's net income was $88.7 million, or 51 cents per share, compared to $49.7 million, or 32 cents per share, in the prior-year quarter. Revenue grew 14% to $3.00 billion from $2.64 billion in the year-ago quarter. Analysts, on average, expected the company to report earnings of 45 cents per share on revenue of $2.98 billion.

At its last earnings call in February, the company lifted its earnings outlook for fiscal year 2011. The company now expects full-year earnings in the range of $1.76 - $1.80 per share for the full year 2011, up from the prior forecast in the range of $1.66 - $1.71 per share. Sales growth for the year is now expected in the range of 10.7% - 12.8%, compared to the prior guidance in the range of 10% - 12%.

Whole Foods' business suffered when the recession crimped spending, and decadence fell out of fashion. The company made a number of major changes -- increasing lower-priced offerings, slowing growth and cutting its debt. It also began to slowly shift its focus back toward health, while maintaining its foodie fan base.

The company has also benefited from growth in the natural and organic category and low unemployment for its core customers, who are typically more affluent and well-educated. Whole Foods has been spurring its revenues through new store openings, acquisitions and comparable-store sales growth. Given the food retailing industry is highly fragmented, the company has been able to maintain a track record of successful integration of its regional acquisitions. The stringent cost-control measures, effective inventory management, and improved store-level performance are driving earnings growth. Whole Foods also has been revamping its pricing strategy and concentrating more on value offerings, while maintaining healthy margins.

The company plans to open 17 stores in fiscal 2011 and 20 in fiscal 2012 with a moderate opening of 14 more stores in 2013.

This year Whole Foods is rolling out a new range of healthier prepared foods, nutritional scorecards and other changes as part of its resolution to lure shoppers who want to get healthy. Moreover, the company is revamping its pricing strategy and concentrating more on value offerings, while maintaining healthy margins.

However, rising raw material costs and sluggish economy may dent the company’s performance. Whole Foods, however, said last quarter that it has been slightly more protected from the fluctuations in commodity markets because of its emphasis on organic foods, which trade under different contract conditions from traditionally grown agricultural products.

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